Latest News on Tax Deadlines and COVID-related Legislation

Legislation and developments continue to move at a breathtaking pace with regard to tax filing deadlines and COVID-related legislation. Here at Canon Capital, our workload continues to be full as we prioritize getting our clients the help they need – despite being in the middle of tax season. We’ve gathered the latest updates in this blog post.

Federal Tax Deadline Extended to May 17, 2021 for Some Returns

As you may have heard, the deadline for filing individual tax returns and payments for 2020 has been extended to May 17, 2021. Pennsylvania has adopted the May 17 date as well.  However, the April 15 deadline remains for some returns, including C-corporations and trust tax returns. We are still waiting on guidance on gift tax returns. Lastly, and perhaps most oddly, the due date for first quarter estimates for individual returns is still April 15, 2021.

In addition to certain tax return deadlines being extended, the 2020 contribution deadlines for IRAs, Roths, HASs, Archer MSAs, and Coverdell ESAs have also been extended to May 17, 2021.

The AICPA continues to advocate for moving everything normally due on April 15, 2021 to May 17, 2021.  Needless to say, we are hoping for some decisions soon.

Employee Retention Credit

Many businesses don’t realize they are eligible for these substantial, recently expanded credits.  If your business was fully or partially shut down on government order, or you had a “substantial” (either 20% or 50%) decline in gross receipts per quarter compared to 2019, you may be eligible for a credit of up to $7,000 per employee. We have been helping many clients with this credit and its interaction with the PPP loans.  Unfortunately, we are hearing too many stories from business owners that their accountant has de-prioritized work related to the ERC. If you are not getting answers and would like to discuss your potential eligibility, please feel free to give us a call.

PPP2 Applications and Draws

As you may have heard, the deadline for applying for a PPP loan has been extended to May 31, 2021.  However, in a somewhat unexpected announcement, the SBA announced last week that they are projecting the funds to run out mid-April. Thus, we suggest getting any remaining applications in immediately.  There may be a replenishment of funds, but nothing has been announced yet.

Also, at the beginning of March, the SBA changed the formula on how sole proprietors calculate their loans. This change was a huge benefit to schedule C borrowers. There is pressure for Congress to adopt a retroactive law allowing schedule C borrowers funded with applications prior to the change to use the new formula.  Again, there is only discussion at this point and nothing imminent. This would also require additional funds to be allocated to the PPP program.

In addition, the SBA has stated that of the approximate 25M schedule C/sole proprietor businesses in the U.S., only 2.6M have applied and been approved for PPP loans. If you have questions about your eligibility, please contact us immediately.

Forgiveness applications should now be available through most or all lenders and should be considered for filing as soon as possible.

Lastly, if you had a “Draw 1” application in January or February (that is your first borrowing under the PPP program), you may now be eligible to submit a “Draw 2” application.  Again, if you have questions about eligibility, please contact us immediately.

Economic Injury Disaster Loan Update

The SBA has raised the COVID-19 EIDL loan limit to $500,000.  There have also been additional funds made available for the program.

IRS to Recalculate Taxes on Unemployment Benefits

With the American Rescue Plan Act passage in March, there was a retroactive provision that made the first $10,200 of unemployment benefits non-taxable for filers under certain thresholds. The IRS came out with guidance and stated that taxpayers who have already filed their returns should not file an amended return. The IRS will recalculate those returns and issue refunds. The refunds will come in two phases starting in May 2021. The first phase will be for single taxpayers who are eligible for the exclusion. The second phase will include married taxpayers and others with more complex returns. However, the IRS may not calculate returns with additional credits properly, making an amended return necessary after all. Taxpayers need to pay attention to the accuracy of the return.

Other Programs

Other brand-new programs have become available, such as the Shuttered Venue Operators Grant and the Restaurant Revitalization Fund. The funds in these programs will run out fairly quickly, so please make sure you, or your banker or advisor, are ready to apply for these programs when they open.

Affordable Care Premium Tax Credits

The passage of the American Rescue Plan Act also includes a retroactive provision stating a taxpayer does not have to repay any of the advance premium credit for 2020 if they received too much. In this case, taxpayers who already filed their 2020 tax returns will need to file an amended return.

Biden’s Potential Tax Reform

There are currently two bills in Congress that could be part of a Biden tax overhaul. The Sensible Taxation and Equity Promotion (STEP) Act would eliminate stepped-up-basis at death. The bill would allow individuals to exclude up to $1M in unrealized capital gains from tax, as well as provide the opportunity to pay the tax in installments over a 15-year period for capital gains that apply to any illiquid assets like a farm or business. Changes would be retroactive to January 2021. The second, Senator Bernie Sanders’ 99.5 Percent Act, proposes to lower the gift tax exemption to $1M and to limit annual gift tax exemptions.

Needless to say, any Biden tax bill needs to be evaluated seriously. Without Republican support, most likely the earliest any tax plan could pass is late fall or early winter when the reconciliation process becomes available again to Congress.  More to come on this over the next few months.

Biden’s $2.3 Trillion Infrastructure, Tax Plus Plan

This topic has just started to be discussed. There may be a possibility for a bill by the end of the summer, so for now, we’ll have to keep our eye on this as well.

Should you have any questions on any of these topics, or any other items that relate to your situation, do not hesitate to contact us at 215-723-4881 or via email.  We’ll be happy to discuss your situation with you.

Additional Resources

Recording of February 11, 2021 Seminar: The Expanded Employee Retention Credit

Recording of January 12, 2021 Seminar: Unpacking the Latest COVID-19 Relief Package

Recording of December 18, 2020 Seminar: Year-end Planning for a Biden Administration and the SECURE Act

Computer Recycling Program

In an effort to support our environment, provide our customers with a cost-effective, easy way to dispose of their unused computer equipment and comply with local equipment disposal laws, we are announcing a new computer equipment recycling program. Here’s how it works:

At your request, we will recycle your used computer equipment for you. Computers will have their hard drives rendered inoperable (so that there is no possibility of anyone extracting data from them). We will then transport your equipment to a certified computer equipment recycling center for proper disposal.

To encourage as much participation in this program as possible, we are keeping the fee for this service to a minimum. To have your computers recycled, simply:

  1. Complete the form below, indicating the quantity of each item to be recycled
  2. Drop your equipment off at our office (along with this form), or give your equipment to one of our staff persons when they are at your office for another engagement
  3. We will send you an invoice for the service fee

Computer Equipment Recycling Program (PDF)

Elm Terrace Gardens Technical Support Request

Canon Capital Technical Support Request

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Services: Let’s Get Started

Accounting

Our team of certified public accountants, certified management accountants, and chartered global management accountants work with you to understand your goals – personal and business.

Payroll

You didn’t start a business to run a payroll company. We stay up-to-date on the latest tax rates and payroll practices so you don’t have to. Our efficient, cost-effective payroll services allow you to continue working on your business goals.

Wealth Management

We work with business owners and personal investors to provide unbiased advice and clear expectations on investment choices.  We work with companies to develop successful retirement plans, such as 401(k) and 403(b) plans, helping employees reach their retirement goals.

Technologies

We take the worry out of your computer system management. From cyber threat management to data back-up, we work with you to address your concerns and make sure your systems are working for you.

Craig Covington

Owner & Technical Consultant

Craig serves as a Technical Consultant on the Canon Capital Technologies team, guiding business clients through all aspects of Managed IT Services, Network Security, Data Backup & Recovery, and Help Desk Support. He was admitted to the company as a unitholder (owner) in 2019 and leads sales and marketing for the Technologies business unit. He has a business degree from Delaware Valley College and an MBA in Marketing from LaSalle University.  Prior to joining Canon Capital in 1998, Craig worked as a general manager of a car wash, as a controller of a heavy equipment company, and as a senior technician for a major home improvement company.  Craig is a Microsoft Certified Professional.  Craig also serves as executive director of Healthy Neighbors International, a non-profit medical missions organization serving in Nicaragua. Craig resides in Doylestown with his wife and has four children. He enjoys spending time with his family.

New W-4 Form for 2021

The IRS has issued the new W-4 form for 2021. The W-4 form has changed significantly since 2020, so now is the perfect time to do a Paycheck Check-up. We have a step-by-step guide available to you here.

If you have any questions about your specific situation, please consult with your tax advisor. If you do not currently have a tax advisor, we welcome the opportunity to serve you. Please call 215-723-4881 or contact us online.

Tax Update: Filing Deadline Changes, PPP Loan Submission Extension, and More

We want to make sure you are up to date on some of the most recent changes that have happened during this week.

Change in Tax Filing Due Date to May 15 for Individual Taxpayers

In our last update, we informed you that we anticipated the IRS would push back the due date of tax returns originally due on April 15, 2021.  As you might have heard in the news, on Wednesday, March 17, the IRS has in fact changed the due date for individual tax returns and the payments due with those returns to May 15, 2021.

On the surface, this seems like a good thing, and we believe it is a partial step forward. However, as with much that the IRS does, they seemed to confuse the situation further. They did not extend the due date for all taxpayers with a due date of April 15, as Trusts, Not for Profits, and Corporations with a due date of April 15 are still due on that date. In addition, any individual taxpayers that are required to make quarterly estimated tax payments (roughly 9.5 million taxpayers) are still required to make their 1st quarter estimated tax payment by April 15, one month prior to their tax return being due. This seems to have made the system more complex, rather than providing relief to those taxpayers who need it most.

We, along with our National Organization the AICPA, are continuing to push for a June 15, 2021, due date and are asking Congress to step in and push for some real relief needed for all individuals and entities subject to the April 15 due date.  So, for now, May 15 is the new due date for some individual taxpayers. Stay tuned as we will keep you updated should the situation change.

Unemployment Exclusion of $10,200

For those taxpayers that will benefit from the recently passed unemployment compensation exclusion of $10,200, the IRS has posted on their website the instructions for claiming this exclusion for those who have not yet filed their tax returns. For those who have already filed tax returns prior to the exclusion coming into law, the IRS has stated that taxpayers should not file Amended tax returns, they will issue refunds to those taxpayers who qualify. We will also monitor this situation, and should the refunds fail to start coming to those due refunds, we will let you know of any revised procedures.

PPP Loan Submission Date Looks to be Extended through May 31

For those businesses and organizations that are eligible for the new round of PPP loans, it looks like the date for applying for the next round of loans will be extended from March 31, 2021, to May 31, 2021.  With the changes recently made for Sole Proprietorships & Single member LLC’s, this will provide some extra time for those needing assistance to keep businesses running.

The House has unanimously passed this Bill and it has moved on to the Senate, so hopefully this will pass shortly. We will update you as we hear news on the final passage.

Should you have any questions on any of these or any other items that relate to your situation, do not hesitate to contact us and we will be happy to discuss with you directly.

Client Technical Support Request

Note: Please use this form for NEW support requests only. Do not use for general correspondence or for checking the status of an existing request as this will create duplicate entries in our ticketing software.

Technologies

Canon Capital Technologies has put together a staff of talented, knowledgeable, and experienced technology consultants who pride themselves in providing the very best, yet sensible, solutions available for each business we work with.

Whenever your business needs help with applying technology to improve communications, boost productivity, or increase revenue, just call on our experienced staff of technology consultants.

In today’s fast paced, ever-changing, Internet-connected world, you can turn to us to help your business keep up with it all. You can rely on us to be there for you!